At Contract Solutions International (CSI) we advocate working with organisations and charities that offer a better welfare for society, especially those charities related and directly impacting the construction, mining and engineering sectors.

For the past three years, CSI has been involved heavily with the construction industry charity: Lighthouse Club Australian Chapter. www.lighthouseclubaus.org – A charity for construction professionals spanning the globe. In the Australian Chapter, the charity has been focusing its efforts on developing awareness and raising funds to work toward supporting the education of the next generation.

For 2014, CSI’s commitment is to a new charity in Western Australia for the support of Enterprise 33, where, through the efforts of Storn Peterson, the goal is to create awareness of the stresses that often go with fly in fly out construction working – in extreme cases leading to depression and suicide. A sensitive yet admirable cause and one which shouldn’t be taken lightly.

While suicide affects many lives, the Australian Institute for Suicide Research and Prevention acknowledged through studies that that Construction and Building Industries experience a heightened level of suicide over other industries, due to a range of factors including but not limited to: working in remote locations, long working hours and extended periods of time away from home, family and friends.

Mates in Construction www.matesinconstruction.org.au specifically focus on reducing suicide in the Australian construction industry through implementation of positive prevention strategies.

CSI believe it and indeed all companies involved within the construction industry have a corporate social responsibility to create awareness and support of the charities and organisations like the ones referred to above, that are out there working to make a positive change.

Feel free to contact CSI if you would like to find out further details related to the above referenced charities.

Agripower decision overturned: Queensland Court of Appeal decides BCIPA does apply to construction work on a mining lease.

For 6 months, “Agripower” was the buzzword in Queensland adjudication circles. Now, thanks to a Queensland Court of Appeal judgment, handed down on 20 December 2013, the uncertainty around whether BCIPA applies to work on a mining lease has been cleared up. In the six months from June until December it was not uncommon to hear potential claimants state that they were not entitled to payment under BCIPA as a result of the Agripower judgment. Equally, how many respondents included the Agripower decision as a potential defence in the event of an adjudication?

Initially, the Supreme Court agreed with the Applicant (Agripower) that mining leases are not land for the purposes of s10 of BCIPA and therefore, for the purposes of s10 of BCIPA construction work on a mining lease does not fit into the description of “forming, or to form part of land”. The decision on appeal was slightly different, with the judgment preferring the ordinary meaning of land rather than the technical or legal definition of land covered by a mining lease.

Lets look at the history in more detail:

Agripower, the owner of mining plant in Skardon River, engaged J&D Rigging to dismantle the equipment. The equipment was substantial in nature and was affixed to the land on concrete foundations. In the period between May 2012 and November 2012, J&D undertook the contract works.

In a payment claim, dated 30 November 2012, J&D claimed a total of $3.1m. In a payment schedule, dated 14 December 2012, Agripower scheduled nil payment citing, amongst other reasons, that the work was undertaken on a mining lease and therefore did not form part of land as required by s10 of BCIPA.

J&D subsequently lodged an adjudication application in which the adjudicator decided, on 25 January 2013, that a sum of $2.5m was due. Agripower then commenced Supreme Court proceedings, seeking to have the adjudicator’s decision declared void.

On 25 June 2013, the Supreme Court held that the adjudicator’s decision was void on the basis that the works on a mining lease did not form part of land as required by s10 of BCIPA.

On 20 December 2013, the Court of Appeal unanimously overturned the Supreme Court judgment, effectively reinstating the adjudicator’s decision.

Whilst the amounts in dispute are not unsubstantial, J&D Rigging have had the uncertainty of being paid hanging over them for a little over 12 months. It is almost certain that they did not envisage the length of time for payment to be clarified when they submitted the initial payment claim. More importantly, this decision means that works on a mining lease, notwithstanding the normal operation of the mining exclusion at s10(3), will not be excluded from the operation of the Act.

NOTE relevant to our article below: On Friday, 20 December 2013, the Queensland Court of Appeal handed down its decision to clarify the landscape in respect of the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA).

A recent case in the Supreme Court of Queensland has serious implications for organisations undertaking construction work on land which is subject of a mining lease and seeking to use the security of payment legislation. The case between Agripower Australia Ltd and J & D Rigging Pty Ltd & Ors is discussed here.

In this judgment delivered on 25 June 2013, the Court decided that work carried out on land subject to a mining lease was not ‘construction work’ under the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA).

Background

Agripower was the owner of a mining plant based at the Skardon River Mine at Cape York, having purchased this from the liquidators of the previous owners, ACC. The land on which the mine is situated is subject to several mining leases issued under the Mineral Resources Act 1989 (QLD).

In June 2012, Agripower engaged J & D Rigging to dismantle and remove the mining plant located at the mine. On 30 November 2012, J& D submitted a payment claim for $3.1million under the BCIPA. Agripower argued that it was not obliged to pay the amount claimed as the work did not constitute ‘construction work’ within section 10 of the BCIPA. The adjudicator dismissed this argument and ordered Agripower to pay J & D in excess of $2.5 million.

Agripower commenced proceedings in the Supreme Court of Queensland seeking a declaration that the adjudication decision was void on the basis that the work carried out by J & D was not ‘construction work’ under the BCIPA.

The decision

In deciding whether the work carried out by J & D Rigging was ‘construction work’, the Court considered whether the mining plant comprised structures or works that formed part of the ‘land’, within the meaning of section 10(1) of the BCIPA. Section 10(1)(a) states

“…dismantling of buildings or structures, whether permanent or not, forming, or to form part of land”

The Court decided that the dismantling works to be carried out under the contract did not constitute ‘construction works’ on the following grounds:

A mining lease, not to be confused with the leasing of land or the ownership of land, does not create an interest in the land over which the mining lease is granted and therefore does not fall within the definition of ‘land’ under the BCIPA.

Although most of the plant was affixed to the land, the affixation was to stabilise the plant to allow for efficient operation, rather than to add some additional feature to the land on which it rested.

The mining plant may have formed part of the mining lease, but did not form part of the land.

Accordingly, a payment claim could not be made pursuant to the BCIPA and the adjudicator’s decision was declared void.

Significance

This decision is raising more questions than answers in the industry. An appeal has been lodged, however this will take some time to make it through the courts. The decision was more about whether or not the construction work was forming part of land rather than an interpretation of whether or not the BCIPA applied to work on a mining lease. In the meantime organisations undertaking construction work on a mining lease should consider what work they are doing and its true purpose (whether it forms part of land or not).

CSI’s managing director David Court has been asked by the RICS to speak on the subject of Adjudication – Security of Payment Provisions.

David Court, a Registered Adjudicator and Managing Director of Contract Solutions International (CSI), will outline the numerous benefits available to contractors, sub-contractors and suppliers alike under the Construction Contracts Act 2004 (Act).

Although this Act has been in place now since 1 January 2005, its benefits are still largely unknown in the Construction industry.

The talk will be on Tuesday, 2 July 2013 between 5.00pm and 6.30pm, and will be at the Theatrette, 152-158 St Georges Terrace.

Proud to be sponsoring the event for the first time, Contract Solutions International entered a team harbouring aspirations, more hopeful than real, of winning. The team was made up of Chris Clark (CSI), David Watts (SNC Lavalin), Jim Ross (PCI) and Frazer Beggs (FBPS). Despite going 3 under par after just four holes, the team failed to maintain its impressive momentum and ended the day 2 under par. The scorecard fluctuated between 3 under and 1 under during the round. The only real golfing prize for the CSI team was the straightest drive from Jim Ross, with other prizes coming from the raffle.

Chris Clark, the very definition of sartorial elegance in his matching corduroy pants and hat, captained the CSI team. When asked for a post-match analysis, Chris said

although disappointed at not winning it was all about charity today. Having said that, who could forget the highlights: my impressive 5 wood approach on the second hole setting up a birdie, an amazing up and down birdie on the third from Frazer, the monster drives from David — usually in the wrong direction — and the steadiness and consistency from Jim who hit every fairway.

The final putt on the 18th will go down as ‘miss of the match’ with everyone missing the hole from under 30cm away.

Contract Solutions have recently expanded their International presence to include offices in Singapore and Dubai. These new locations allow CSI to offer their specialist commercial, contract and programme management services to a wider range of markets and clients.

David Court, CSI’s Managing Director, was very enthusiastic about the future:

“We have wanted to firm up our footholds in the South-East Asian and Middle-Eastern construction markets. This move allows us to continue to build and develop the excellent relationships we have developed there.”

CSI’s Managing Director David Court is speaking at a seminar organised in conjunction with RICS Matrics WA on the 22nd March 2012. The seminar is “Introduction to adjudication in construction contracts“. Please contact the RICS to book places. Details are below.

David Court DipArb DipSurv MRICS FCIArb is a registered adjudicator who has prepared numerous applications and responses, and been the appointed adjudicator on dozens of submissions. His presentation will cover the adjudication process and who it applies to, as well as outlining the requirements for both the applicant (the party serving an adjudication application) and respondent (the party being served) in an adjudication.

Event details

The Construction Contracts Act WA came into force on 1 January 2005. However, many in the industry remain unfamiliar with its workings and how it affects construction contracts in their day-to-day work, from the implied contract terms to parties’ rights to adjudication. Adjudications are fast-paced, with short 14-day deadlines, and the determination may be legally enforced by court order.

An introductory knowledge of the Act and its processes is invaluable to your company and your clients.

David will impart some of his experiences and practical tips gleaned over the past two decades whilst working globally as a specialist contracts advisor.

Presented with a light hearted anecdotal approach, David will demonstrate the important link for Owners, Operators, Client Representatives and Contractors alike, between disciplined administration and the goal of minimising risk and maximising opportunity.

There are a variety of ways to avoid construction disputes. First thing you should do is to check the terms and conditions of the construction contract you have entered into and see when you need to make a payment and how, and are the terms of payment in the contract acceptable to both parties. If there is an adjudication clause, make sure that it does not state that you will have to pay the other parties or the adjudicator’s costs no matter whoever wins. Revise who will be the adjudicator or who will choose an adjudicator if ever one is needed in a construction dispute.

It is also very important that you understand the variations and extension of time clauses, whilst taking note of any time limits for issuing notices of any disputes. If there is any doubt though, the contract should be reviewed by a solicitor or an expert before anything is signed or work has started.

Another way to avoid any contractual disputes is to keep up communication with the party to the contract. Make sure that you have given notice at the time of any event that would hold up the progress on the construction job or which will add any extra costs onto the work, as the client will be more appreciative of being notified of this so long as it is clear and specific and is made in writing. The best approach to managing your client’s expectations is by giving them regular updates, including the accounts and estimates of where it is heading. It is best practice to start this from the first day of the work then no-one will be surprised when the bill comes when the work is all finished.

When a client asks for additional work to be carried out, it is always a good idea to get these terms in writing from the client before the work is carried out. This can include new or amended drawings, letters or meeting minutes. It is wise to avoid any emails as the contract that you first entered into may not recognise emails as a term of agreement. If the client first informs you of the additional work that needs to be done verbally, then you should ask for it to be confirmed in writing.

As well as this, obtaining an agreement from a client in relation to extra costs through the additional work is a good way of avoiding any disputes over payments that need to be made. This should be received before the work is carried out. If this is not possible, discuss with the client regularly to agree and sign-off the costs of the additional work that has been done and do not wait until the end of the work before obtaining the clients agreement.

The articles published on this website are for discussion purposes only, they do not constitute advice of any nature and should not be relied upon as such. Advice about your specific circumstances should always be sought separately before taking any action.